Contemporary Economic Relations between India and African Countries – Motives, Directions and Forms

Abstract

Since 2003, political and economic relations between India and selected African countries have rejuvenated. This is manifested by a sharp increase in the volume of foreign trade, foreign direct investment, and technical and economic assistance provided by India to Africa. Indian economic engagement has been perceived as an attractive alternative for aggressive Chinese capital – it takes a softer approach and provides added value for the domestic economy of the partner country. On the other hand, critics of Indian assistance point out the negative social, economic and environmental consequences that do not differ much when comparing Chinese and Indian investments in Africa. This paper examines the motives, geographical and sectorial patterns as well as most common forms of contemporary Indian business engagement in Africa. It provides a short analysis of the costs and benefits to the African countries in the partnership in an attempt to assess the developmental impact of India’s rejuvenation in Africa. The pattern of India’s engagement on the African continent differs by region. In general terms, western and northern resource-rich countries can be differentiated when looking at India’s investments, while countries in the south and east parts of Africa are home to large Indian minorities. A separate case is Mauritius, a financial off-shore centre that maintains unique economic relations with India.